OH S OLH 3-2B- Predetermined overhead rate: costing an individual job Ready Brak

Question

OH S OLH 3-2B- Predetermined overhead rate: costing an individual job Ready Brakes specializes in brake repair in automobiles. The company applies overhead costs to jobs on the basis of direct labour hours. For the current year, total manufacturing overhead was expected to cost ss0,000. The total expected direct labour hours were anticipated to be 8,000. The company was working on job #842, a brake pad replacement on a Volkswagen Golf. The following costs were incurred: New Brake Pads: Labour Required $8 40 minutes of employee time - wage rate of $9 per hour a) Determine the cost of the job b.) Assuming the company charges a flat rate of $50 to replace brake pads, how much gross profit will have been carried on Job #842? ??? hox&.asCaso

Explanation / Answer

a) Direct material cost--New break pads $      8.00 Direct Labor cost = 40*9/60 = $      6.00 Overhead assigned = 6.25*0.40 = $      2.50 Cost of the job $   16.50 Pre-determined OH rate = 50000/8000= $      6.25 b) Gross profit = 50.00 -16.50 = $   33.50

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